PayPal’s partnership follows a similar deal with MasterCard’s larger rival Visa Inc in July as the company looks to expand its payments network.
PayPal will allow users to select a credit or debit card as the default payment method and share data on transactions made through MasterCard’s tap-and-pay feature, which allows the shopper to wave a card or mobile phone over a reader to pay, the companies said in a statement.
As part of the deal, MasterCard will allow PayPal users to withdraw cash from their accounts using a debit card and also waive the digital wallet fee it currently charges PayPal.
The two companies have an existing partnership for co-branded consumer credit cards in the United States and Puerto Rico.
PayPal, spun off from e-commerce company eBay Inc last year, has focused on aggressive growth.
The company’s revenue in the second quarter rose more than 15 percent to $2.65 billion from a year earlier and the volume of payments it processes jumped 28 percent to $86.21 billion.